The biggest shift in economic outlook is on China, Colvin said.
Most directors (60%) say red tape and regulation has increased in the last 12 months, and directors believed compliance with such regulation took, on average, 26% of their total board commitment time.
For example, in April, new laws intended to target phoenix companies now see all directors –whether on private, public, or not-for-profit boards – made personally liable for any unpaid superannuation owed to staff, even if they are only newly appointed to the board. It’s also the second year since the introduction of the two-strike rule, which sees a spill motion of the board automatically triggered if at least 25% of shareholders vote against the remuneration report two years in a row. This means directors are having to spend more time and effort convincing shareholders to back their remuneration decisions.
Colvin is sceptical about both these changes. He says executive pay was always going to decrease in such an economic climate, as bonus targets and similar hurdles are not being met.
“Also, Australia is regarded as having some of the best directors. We (the AICD) export our company directors’ course all over the world.
“The question is: do we have such great directors as a result of their education and solid management backgrounds, or because of our regulations? I would say it’s more of the former than the latter.
“[Such legislation] is disproportionate, over the top, and creates new problems where there were none … Anecdotally, I know from conversations with the director community that many great directors aren’t sitting on boards right now. They say they don’t want to be compliance officers; they want to guide company performance.”
Amidst all the bad news, there were some glimmers of hope. Now that the carbon tax is operational, fewer directors expressed alarm at the impact it would have on their business (though 57% still think abolishing the tax would have positive effects on their business. On the national broadband scheme, another government policy currently being rolled out, 40% were in favour.
Another release earlier today, the November Westpac Melbourne Index of Consumer Sentiment, showed consumer sentiment was up 5.2% in November to its high
Myriam Robin is a reporter for SmartCompany and its sister site LeadingCompany. She has degrees in economics, international studies and journalism. She likes writing about businesses taking risks and doing new things.
